Infrastructure development has always been seen as the backbone upon which the economic development of a country is made or broken. In order to cater for this, many companies are hoping to expand into the construction sector. This would mean increased opportunities for insurance companies who focus on this sector.
Through its recent acquisition into AC&E Engineering, New National Assurance has achieved this, and Director Kalim Rajab says that the decision to expand into this area was not hard to make.
“AC&E have been our exclusive engineering administrator since 2005 when they first entered the engineering market. In a specialised sector like construction and engineering, first and foremost you’ve got to have faith in the underwriter’s skills level and technical expertise. This is what first attracted us to AC&E’s management and made us want to work with them to service this specialised and complex area,” says Rajab.
Confidence in the regional market high although there has not been major excitement in the South African construction market since the infrastructure boom of 2010, there are a number of key engineering projects in South Africa which need to be executed. Because of this, Rajab is confident that there is still significant interest in the sector.
“We would not have concluded this deal if we were not confident of the long term potential of this sector in sub-Saharan Africa, which a geographical area where we are seeing infrastructure is increasing in scope and ambition. I think many large corporates and state owned entities want a carrier with a proven track record of delivery in this area as well as strong empowerment credentials, and we want to fill this gap,” says Rajab.
South Africa’s largest empowered insurer
South Africa has a long history and tradition for supplying insurance companies that are well tuned to the specific needs and trends of the South African policyholder, and can therefore offer specific tailor made products to suit these needs. The acquisition of AC&E is a further step towards this as is makes New National the country’s largest empowered insurer.
“We have always stood for sustainable empowerment, but our approach is somewhat different to the traditional interpretation of empowerment. When we talk of empowerment, we talk of the empowering effect we have on our workforce and of the development impact that we have through our procurement spend, where the hundreds of millions of Rands we use annually for paying our policyholders’ claims and for operating our business, is in a manner supportive of local black suppliers in the insurance industry.
But more than that, when we talk of enterprise development, and of working to support administrators who would ordinarily face high barriers of entry in the competitive South African insurance landscape, our interpretation of who we should help is not only limited to emerging black administrators- it extends to the gender aspect as well. In that respect, AC&E is a very real example of that. Anne-Marie Fourie, who is heading up AC&E, is a woman who faced extreme prejudice and chauvinism and who had to work her way up in a man’s world. When NNAC talks of transformation, we are talking along both racial lines as well as gender lines,” says Rajab.
Establishing the empowered benchmark
There are a number of ways in which one can determine if a company is the largest company within a specific category. New National recently became the largest empowered insurer after achieving R1 billion worth of business.
“I wish we could have reached this milestone in more favorable times. The market is still very tight at the moment, and the industry as a whole has returned disappointing results. Our plan for 2015 involves a very definite focus on the specialised lines of corporate, construction and engineering. Companies with the necessary skills and capacity can experience massive growth in this sector,” concludes Rajab.
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